Why Cincinnati Financial’s CEO Thinks Insurer Will Win Covid-Related Lawsuits
Cincinnati Financial Corp. is spending millions to defend itself against numerous lawsuits filed by businesses claiming it should pay them for time their companies were shut down.
But CEO Steve Johnston said Thursday on a conference call the company is in solid position to defend itself.
Cincinnati Financial added $8 million to its reserves in the fourth quarter to cover legal expenses in defense of business interruption claims, the company said in reporting fourth-quarter results late Wednesday.
The crux of the matter is numerous businesses have sued Cincinnati Financial’s Cincinnati Insurance Co. subsidiary and other insurers, arguing they should be covered for business interruption because the government required them to shut down for a period of time during the coronavirus pandemic. Many of those businesses are restaurants.
Cincinnati Financial and other insurers have argued in numerous similar cases around the country business interruption coverage applies to “direct physical loss or direct physical damage.” Because there was no structural damage or alteration to business’ property due to the pandemic, insurers have argued that coverage doesn’t apply.
Johnston said courts have granted “several of our motions to dismiss” in recent cases.
In Northern Ohio, a federal court recently allowed Cincinnati Financial to raise the case to the Ohio Supreme Court, Johnston said.
“If accepted, the state Supreme Court will have an opportunity to settle the question under Ohio law of whether the presence of the coronavirus constitutes direct physical loss or damage to property and thereby answer the basic question underlying the majority of business interruption claims,” Johnston said on the conference call.
“We are confident in our legal strategy given our understanding of the law and decisions made in the majority of other business insurance court cases throughout the country to date,” Johnston said. “To the extent we have setbacks, we’ll continue to pursue the judicial process.”
Cincinnati Financial is facing multiple business interruption lawsuits, including one in Hamilton County Common Pleas Court filed by West Side restaurant Primavista. Other lawsuits regarding business interruption coverage during the pandemic have been filed against it in Columbus, Cleveland, Milwaukee, Kansas City, Mo. and elsewhere.